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Comment by woodruffw | Hacker News Reader

If I was a member of Twitter's board, Musk's history of erratic public behavior, SEC settlement, and openly hostile attitude towards the company's employees would be more than sufficient to justify my belief that his controlling ownership would not be in the interest of the current average shareholder.

That opinion would also be consistent with how "fiduciary duty" is interpreted by US regulators: companies are not required to perform any particular action that might reasonably be in the interests of shareholders; they must merely show that the company's actions were intended to be in the best interests of the shareholders.

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It doesn't have to be complicated. The shareholders should have a right to decide through a proxy vote on whether to accept the offer

To me, this seems obvious. No reason something this fateful shouldn’t be put to shareholder vote. No good reason, at least.

Yeah, I think Elon is going to demand this (and as a 9% shareholder himself, is likely to get it)

He could have made a cash tender if he was serious. But he isn't, and does not have the cash.

The fate of the company after it has been taken private doesn't matter as far as "fiduciary duty" is concerned.

> fate of the company after it has been taken private doesn't matter as far as "fiduciary duty" is concerned

If it goes private. As always, Matt Levine says it better than I can:

"...the financing seems to be made up of cobwebs and phlogiston. But also Musk has joked about taking companies private before, and he generally changes his mind a lot. (He agreed to join Twitter’s board last week! And then changed his mind four days later!) If you are a well-advised professional public company board, it is just catastrophic to imagine that you might say 'okay Elon $54.20 it is' and then he’d say 'ha no I was kidding, psych!' That would be crippling for a public company. Also that is basically what he did to Twitter’s board last weekend!"

https://www.bloomberg.com/opinion/articles/2022-04-15/sure-e...

Levine is being disingenuous, as usual. Obviously he would have banks and investors fighting to finance the deal. Wouldn't a breakup penalty address the breakup problem?

Not to mention he is being disingenuous by implying there was no material change between getting offered a seat at the board, and hearing what accepting that seat would entail.

Levine is a former Goldmanite, Twitter advisor. GS versus MS, the latter here unusually on the hostile side.

It sounds like Musk received the offer, accepted it and changed his mind afterwards. That is, after accepting the terms, not after receiving them. If that’s the sequence of events, I don’t think Levine is being disingenuous.

> Wouldn't a breakup penalty address the breakup problem?

No. If you’re at a table negotiating a break-up penalty, you’ve already crossed the Rubicon. You have indicated that the price was at the very least worth considering.

If that buyer then walks before agreeing to the break-up penalty, the damage has been done. Board seats have been lost for less.

(To be clear, Musk is a shitshow, but a cash-out is a cash-out. How to balance those things is above my pay-grade.)

I agree thoroughly that's why tge pairing with Twitter would be marvelous.

However, I think it's a harder case to argue when twitter stock closed at $.18 above the price they went public at in 2013. Sounds like whatever it is they have been doing hasn't been in the interest of the average shareholder either.

The stock is toast regardless after this.

After they've been bought out, the performance of of the company is of no concern to the former shareholders.

The problem is, this plan applies much broader than Musk, and penalizes even the “good” activist/takeover artists.

One can equally argue that opens sourcing Twitter algorithm and building trust would bring incalculable number of new users, have a profound impact on their ad business and not to mention, cut down their competitor's moat. People will flock to Twitter like bees. Ad revenue + subscription would skyrocket.

So, it can go either way and can be argued either way.

That’s correct. Which is why “fiduciary duty” arguments aren’t very good.

> opens sourcing Twitter algorithm

People need to stop saying this. It's nonsense. Or maybe keep saying it so we know your clueless about how anything works that your commenting on

> It's nonsense

Why? (Honest question.)

Also genuine, why would a person believe that would happen? The foremost thing that comes to mind is they'd be giving something of great value and receiving nothing in return.

which part do you want open sourced? timelines are generated after going through machine learning and then multiple services. even then, some of the infrastructure limits what you see in the end.

https://blog.twitter.com/engineering/en_us/topics/infrastruc...

> Unfortunately, Haplo has its limits. Since we try to pull every single Tweet ID in a conversation every time a conversation is loaded in real-time, this is potentially an unbounded amount of data. We’ve found that if our platform tries to load more than a certain number of entries from our cache at once, our cache request latency will spike, and we begin to time-out on a significant fraction of read requests. Because of this, there is a limit of thousands of Tweets per conversation tree in this cache.

even just showing an ad is a ton work has a bunch of services involved

https://blog.twitter.com/engineering/en_us/topics/infrastruc...

Other stuff that I think explains the complexity

https://blog.twitter.com/engineering/en_us/topics/insights/2...

there's no single algorithm, its a bunch of parts coming together from hundreds of engineers and multiple services.

You think there is no such thing as OSS models?

Please explain. I can easily envision much more transparency on how the feed works.

Transparency i can agree with, i think twitter does a horrible job at that. especially explaining the rumored shadow bans and stuff. But i think thats different then open source code

I think you’re vastly overestimating the number of people who pay attention to such things.

> If I was a member of Twitter's board, Musk's history of erratic public behavior, SEC settlement, and openly hostile attitude towards the company's employees would be more than sufficient to justify my belief that his controlling ownership would not be in the interest of the current average shareholder.

That... makes absolutely no sense. The interest of the current average shareholder ends when they sell their stock. There is no point in time at which both (1) the current average shareholder owns more than zero shares, and (2) Musk has a controlling interest. So it's impossible for those two things to conflict.

If you were a member of Twitters board, would it be in the interest of the current average shareholder to sell their shares at well above the market price?

It depends on how you define fiduciary responsibility. If it’s a point in time, transactional view, yes. If it’s a long term view of maximizing share holder value over time, not necessarily.

> If you were a member of Twitters board, would it be in the interest of the current average shareholder to sell their shares at well above the market price?

That definitionally depends on whether you, as that hypothetical board member, believe that Twitter has the potential to reach a share price higher than $54.20 if it stays public.

Also, remember there is nothing that binds the board of a company to solely consider potential shareholder value in the actions they take. There's a widespread belief that "fiduciary duty" overrides all other concerns, but from a regulatory/legal standpoint, that's simply not so. The board obviously needs to take it into account, but if they believe a merger or takeover is not in the best interest of the company, they don't have to take it.

Right, but they hurt other shareholders by preventing them from taking it.

Don't like the bid, fine, say no -- but don't prevent your peers from selling out.

A buyout is all or nothing. Many current shareholders (a majority?) think the offer is low. The board is representing their interests.

But all that is irrelevant because he wants to take the company private- no shareholders. The impact to shareholders is the massive bailout he would give them on their shares.

If they cared about shareholders best interests they would bring it to vote.

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